In December GPL had a press release which indicated that they had begun to mine and mill a "high" grade ore zone at the end of October. Ore grade averaged 225 gpt Ag and 1.78 gpt Au during November. This is an increase above the 3Q 2011 average ore grades of 175 gpt Ag (+25.7%) and 1.12 gpt Au (+58.9%) when 484,550 eq oz of silver was produced. If one assumes Oct production was similar to the 3Q average (low grade ore) and Nov/Dec production was 30% higher, production during the 4Q 2011 should have been (484,550/3 + 484,550/3 X 2 X 1.30 = 161,517 + 419,943) or 581,460 eq oz of silver. This does not account for any increase in mill throughput as was projected. GPL also revised 4Q production to 550,000 eq oz of silver. My guess is they sandbagged and production will exceed their projection by at least 5.7%. If production does not exceed projections, they have returned to mining lower grade ore in December.... Maybe GPL management has learned to not make forward production guidance that they cannot meet or beat.
Another production shortfall, this time because of reduced ore grades at Topia where ore throughput was 33% higher than in the 4Q 2010 with production being 8% lower. Ore grades were only 27% lower so recoveries in lower grade ore were not as hi. The other mine (Guanaj..)appears to be back on track but apparently both mines have variable ore grades that are consistently lower than anticipated. How else could they have projected 2.8 million eq oz of Ag production for 2011 and only produced 2.2 million eq oz of Ag? If ore grades are off by 25%; does that mean that ore resources are off by a similar amount? 545K eq oz of silver produced instead of projected 550K eq oz Ag for the 4Q 2011. Not much of a miss, but still a miss. The low end of production guidance (2.5M eq oz Ag) for 2012 may be difficult to reach... 2.5/4 = an average of 625,000 eq oz of silver per quarter for 2012. It now looks like GPL is two years behind schedule to reach production of 2.8M eq oz of Ag.